The short answer is Sort of…

• Good credit
• Stable income
• Borrowers must intend to live in the property.

There are a few lenders that will “give” you the 5% of the purchase price allowing you to get 95% financing. This program is called “flex down” or “free downpayment mortgage” and here is how it works:

1. You pay posted rates instead of a discounted rate.

2. The cash is given to you at closing allowing you to put it as the 5% down payment.

3. You need to show cash assets of 1.5% of the purchase price of the home to prove

you can afford to close on the transaction.

4. You will still need some sort of a deposit!

5. You will pay slightly higher CMHC fees.

POSTED RATES:

In mortgages, as in all other elements of business there is no such thing as a free lunch. The rate is 5.49% as of today, with discounted rates in the 4.00% range. You will be paying the higher way, the bank recoups its 5% gift of money that it gave to you over the 5 year term. take a 5 year fixed term. YOU get to live in the home while you save and build equity the old saying of “The Best Way to Make Money is Off Someone Else’s Money!”

CASH GIVEN AT CLOSING:

The 5% cash gets sent to the lawyer’s office handling the transaction. The bank needs to know that if they give you the 5% that you can still put up some money to cover property transfer tax (if applicable), move in costs, utility transfers, etc…WITHOUT borrowing the money. You’ll need to show 1.5% of the purchase price of the home in an account in your name. How it got there isn’t an issue. It just has to be in your account.

THE DEPOSIT PAID TO REALTOR’S OFFICE:

When you write an offer, you will still need to have money to give as a deposit. You need to tell your Realtor that you need the deposit loan as low as possible as you need to be able to pay this amount upon subject removal. If you only have 5000.00 available and you’re buying a place valued at 300,000 this 5000.00 may or may not be enough to get an accepted price. You will have to work with your Realtor on what would be an acceptable deposit. Remember, you will get it back at the closing date when the bank’s 5% shows up but you still need something in the interim and this is an often forgotten essential element to a “no money down” purchase.

HIGHER CMHC FEES

When you do a “no money down” mortgage, the CMHC fees are 2.90% base instead of 2.75% base and they are BUILT INTO THE MORTGAGE PAYMENTS – meaning you don’t have to pay for them up front, they are blended into your mortgage payments.

NOW THE SLIGHTLY DOWN SIDE….THE CREDIT QUALIFIER:

You MUST have decent credit. Your beacon score MUST be at least 680, sometimes 650 is tossed around but when it comes down to the nitty gritty, 680 is where you will need to be. This means holding off on that new car loan, vacation loan or applying for that Visa card till AFTER your deal is finalized. And you must have sufficient income to qualify for the mortgage payment at the higher rates based on your VERIFIABLE income.

Benefits of Borrowed or Cashback Mortgages